The Virginia Resources Authority sold $197.5 million in bonds to finance capital improvement projects across the state.
The issuance includes $136.1 million in infrastructure revenue bonds and $61.4 million in “morel obligation revenue” bonds.
The infrastructure bonds mature between 2024 and 2054, yielding between 2.91% and 4.32%. They received a rating of Aaa from Moody’s Investors Service and AAA from S&P Global Ratings.
The moral obligation bonds also mature between 2024 and 2054, yielding between 2.96% and 4.303%. They received a rating of Aa1 from Moody’s and AA from S&P.
The moral obligation bonds are backed by a subordinate lien on the loans that secure the bond issuance. That results in “essentially no default tolerance, which is mitigated by strong program oversight,” Moody’s analysts wrote. They added that the infrastructure bonds had “strong” debt service coverage and 30% default tolerance.
The bond proceeds will fund the purchase of debt issued by localities throughout Virginia, with the intent of financing capital improvement projects. Many of these projects relate to infrastructure, such as upgrades to roads and water systems.
The Virginia Resources Authority was founded in 1984 as a political subdivision of the state, with the mission of financing “reasonable and necessary” projects statewide. The bonds are limited obligations of the authority, backed by loans it makes to more than 130 municipalities in Virginia. The “moral” obligation refers to the state’s commitment to maintaining a sufficient balance to secure the bonds.
Raymond James & Associates, Inc served as lead underwriter on the issuance of infrastructure bonds. Truist Securities, Inc won a competitive bid for the moral obligation bonds. Davenport & Company LLC acted as financial advisor.